Miami trying to catch up to real estate demand

Of the 22,000 condos created in downtown Miami during the boom years, only about 600 remain unsold -- thanks mainly to an influx of Latin American investors seeking a safe haven for their money.

Developers are reacting to the shrinking inventory predictably enough -- by building more condos.

The most ambitious project by far is the $1.05 billion Brickell CityCentre, a development that will add about 800 condos in two 43-story towers, a hotel, luxury movie theater and a wellness center aimed at tourists from Latin America.

Brickell also will mark the first new office building and upscale shopping center in the downtown neighborhood since 2007.

"This will be our Rockefeller Center," said Robert Kaplan, a principal with the Miami Beach office of Ackman-Ziff, a New York-based mortgage brokerage, referring to Brickell CityCentre.

The Miami construction boom comes amid a broad revival in the real estate market. As demand rises and supply shrinks, cities nationwide are experiencing a rebound as well.

In February, national home prices jumped by 9.3 percent over the same month a year ago, the highest growth rate since May 2006, according to recent S&P/Case-Shiller index data. Miami, by comparison, rose 10.4 percent.

Miami's downtown condo market has been equally robust. Prices increased to $440 a square foot in the last quarter, compared with $400 in the same quarter a year ago, according to Condo Vultures, a local brokerage.

With the tide turned, developers are trying to capitalize.

In the last two years, plans for 25 new condo projects have been announced. Within sight of Brickell CityCentre, eight residential buildings are under construction, including three being developed by the Related Group, an affiliate of the Related Cos. of New York.

"We seem to be on the cusp of another boom," said Peter Zalewski, a principal at Condo Vultures. "The question is whether this will be a controlled boom or another out-of-control boom, which is what we're known for."

Swire Properties, a division of a Hong Kong conglomerate and Brickell CityCentre's developer, is trying to balance the mixed-use project.

The retail space at Brickell CityCentre, being built with the owner of the Bal Harbour Shops open-air shopping center just north of Miami Beach, will measure 500,000 square feet.

The larger space will be delayed until the vacancy rate in the city's financial district ebbs. It's now at 16.7 percent, according to commercial real estate brokerage firm CBRE.

Brickell CityCentre's plans also reflect Miami's desire to enhance urban planning and infrastructure. Occupying four blocks, the project is next to a station of a free transit line that circulates downtown.

Swire president Stephen L. Owens said his company had been studying the site since 2006. Two years later, Swire paid $41 million for a pair of vacant properties, then added two others for 9.1 acres.

The size enabled the developer and the city to jointly create a master plan that includes improvements to the streets and sidewalks.

As a result, Swire is constructing two bridges, with shops and cafes, to make it easier for shoppers to travel from one building to another.

"The biggest challenge was connectivity," Owens said.

Swire also won approval for an underground, 1,600-space parking garage -- a rarity in Miami.

The focus on high-end shopping also coincides with a new direction in the business of the Whitman family, Swire's retail partner.

Since Bal Harbour opened in 1965, the family has had luxury shopping almost exclusively to itself. The Whitmans say sales last year at Bal Harbour were $2,810 a square foot, compared with a national average of $526.

But several longtime tenants -- including Louis Vuitton, Cartier and Hermès -- have recently left the shops for spots across Biscayne Bay, even as new luxury stores are opening at Aventura Mall just north of Miami.

In response, the Whitmans decided to team with Swire.

"We see that area as a strong residential community with a thriving tourist market that is only getting stronger," said Matthew Whitman Lazenby, Bal Harbour's operating partner and a grandson of company founder Stanley Whitman.

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